- In March last year, Kuramo acquired additional shares in the Kenyan-based firm after pumping in Sh1.1 billion in the rights issue.
- The Mauritius-based private equity firm already owned 25 per cent stake in a 2016 deal that gave it access to 93.7 million shares.
Pan African private equity firm Kuramo Capital is now a majority shareholder in Kenyan-based TransCentury after the Comesa Competition Commission (CCC) gave the deal a clean bill of health.
In a decision made at the 105th meeting of the Committee responsible for an initial determination regarding the proposed merger, the regional competition authority said the deal does not monopolise the supply of electrical gadgets in the region.
This is because most electrical equipment supplied to end customers in the Common Market originates from, inter alia, South Africa, India, or China which is further justification for a wider geographic scope market.
"Any further broadening of the geographic scope of the market will not change the competitive assessment of the transaction and thus, for this transaction, the geographical market is likely to be the Common Market."
The proposed transaction entails Kuramo increasing its shareholding in the target to approximately 74 per cent.
This will enable TranCentuary to use the capital raised to settle part of its debt obligations and to unlock additional working capital financing for itself and its subsidiaries.
This is in line with its recovery and growth strategy.
In March last year, Kuramo acquired additional shares in the Kenyan-based firm after pumping in Sh1.1 billion in the rights issue through the conversion of a shareholder loan to equity.
This amounted to a Sh515.7 million investment in the cash call under normal entitlement, which will defend its stake in the company.
The Mauritius-based private equity firm already owned 25 per cent stake in a 2016 deal that gave it access to 93.7 million shares in the infrastructure investment firm.
The new deal now gives the equity firm an additional 48 per cent stake or 468.8 million additional shares at the set price of Sh1.1 a piece.
The private equity firm did buy out minority investors in the company having applied and obtained exemptions from the Capital Markets Authority.
The approval by Comesa seals the deal as there is it eliminates the need to seek similar approvals from Kenya's Competition Authority of Kenya (CAK).
This is after the domestication of Comesa rules in 2019 which eliminated double notifications.
Companies based in Kenya with at least two-thirds of their combined turnover or assets generated or located in the country only need approval from the Competition Authority of Kenya (CAK) to merge.
Merger transactions that meet the Comesa notification threshold should make a filing only to the Comesa Competition Commission (CCC) and not the CAK. This helped eliminate red tape and bureaucracy.
Companies with a minimum combined turnover or assets of $10 million that want to merge must notify the authority, while those with assets of below $5 million do not need approval.
Under the previous rules, companies pursuing mergers in Kenya were subjected to an expensive and rigorous approval process by both the CAK and CCC, often causing delays in transactions and leading to collapse.
In the new rules, Kenya has also doubled the merger filing fees to $40,000 (Sh5.5 million) for companies with turnover and assets above $500 million (Sh69 billion), $20,000 (Sh2.8 million) for companies with a turnover of between $100 million and $500 million, and $10,000 (Sh1.39 million) for those with a turnover of between $10 million and $100 million.
Those below $10 million are not allowed to pay any fees.
Kenya adopted the regulations from Rule 4 of Comesa Rules on the Determination of Merger Notification Thresholds and Methods of Calculation in 2019.
The rules came into effect on December 6, 2019, and Kenya was the first of the 21 Comesa member states to domesticate them.